Good morning. Well a slightly suspect day yesterday that seemed to rise as expected but not from the level I wanted to enter a long. Typical! The main resistance this morning is not far away at 6670 which is the top of the 10 day Bianca channel – and with the daily pivot at 6649, first support isn’t far away either – one will break soon. The S&P has had a decent bounce since its lows, so now its back at 1950 might start to run out of steam for another lego down soon. The UK wage growth news wasn’t great yesterday though it did make the BoE say that there would be no interest rate rises this year, thus scuppering my prediction of a Q4 0.25% rise. Bottom line is as we have all long suspected that despite the recent news saying all is rosy, it actually isn’t that great in reality. Looks like the Dax bulls have bounced it quite well, just need to break 9220 to generate some more breathing space int he short term.
Asia Overnight from Bloomberg
Asian stocks rose, with the benchmark index on course to gain for a fourth day, as a slowdown in the U.S. retail sales fueled bets the Federal Reserve won’t raise interest rates earlier than expected.
The MSCI Asia Pacific Index (MXAP) added 0.4 percent to 147.84 as of 11:43 a.m. in Hong Kong after rising 2.2 percent the past three days. All of the gauge’s 10 industry groups advanced today. A drop in China’s credit expansion and an unexpected slowdown in investment spending added to speculation that policy makers will expand stimulus in the world’s second-biggest economy.
“Even though the Fed is changing the way they talk about rates, we are still far away from seeing higher interest rates,” said Donald Williams, Sydney-based chief investment officer at Platypus Asset Management Ltd., which oversees about $1.5 billion. “As long as rates stay low, which could be still a couple of years, equities will remain well bid.”
Futures on the Standard & Poor’s 500 Index were little changed today after the measure rose 0.7 percent yesterday. Retail sales were little changed in July, the worst performance in six months, as demand for cars slowed and tepid wage growth restrained U.S. consumers. The slowdown in purchases followed a 0.2 percent advance in June, the Commerce Department reported yesterday in Washington.
Regional Gauges
Fed Chair Janet Yellen has said officials will keep the central bank’s benchmark interest rate low for a “considerable time” after its bond buying ends.
Japan’s Topix (TPX) index rose 0.6 percent as the yen fell for a fourth day against the dollar. South Korea’s Kospi index gained 0.1 percent as the nation’s central bank cut its key interest rate for the first time in more than a year. Australia’s S&P/ASX 200 Index advanced 0.7 percent, while New Zealand’s NZX 50 Index added 0.2 percent. Taiwan’s Taiex index and Singapore’s Straits Times Index both increased 0.1 percent.
The Shanghai Composite Index fell 0.1 percent. Hong Kong’s benchmark Hang Seng Index slipped 0.1 percent after closing yesterday at the highest level since November 2010. The Hang Seng China Enterprises Index of mainland stocks traded in the city dropped 0.3 percent.
China Stimulus
Chinese stocks closed higher yesterday on speculation the government will take steps to support its 7.5 percent economic expansion goal, after initially falling when the People’s Bank of China reported the lowest level for its broad financing measure since 2008. Barclays Plc is forecasting two second-half interest-rate cuts, while Australia & New Zealand Banking Group Ltd. said a reduction in Chinese banks’ reserve requirements is imminent.
FTSE Outlook
I am feeling quite bearish today, as long as 6670 holds as resistance. If not then the next level to watch above that is 6687 then 6701 as the resistances. If we do drop from that 6670 area then the pivot at 6649 is the first support, followed by 6641. A break below that will more than likely reach the 6629 level where there are a few PRT support lines (on the 30min chart) including the 200EMA. If that level were to break then I think we will probably drop back to that 6607 level which was a low point the other day, and also around the bottom of the 30 minute channel corresponding with the 6670 channel top.
If I am wrong and its not bearish from 6670 then a long at 6680 (the stop level for the short) should get 6687 and possibly 6700.